Sept. 9 – Russian President Vladimir Putin has announced that a US$100 billion fund is being introduced as a measure to steady currency markets that have been shaken up by the proposed unwinding of the U.S. monetary stimulus.
China will contribute the majority share to the fund at US$41 billion. Brazil, India and Russia will contribute $18 billion each, and South Africa $5 billion.
The US$100 billion is much smaller than the US$240 billion that was previously put forward during the original planning meetings, as some of the countries had struggled to find the requisite funds and called for a lowering of the amount. The fund is also not expected to be fully functional for some time.
Russian Deputy Finance Minister Sergei Storchak explained that “we have asked not to create unnecessary expectations. Politically, the countries are ready, but technically they are not.”
India received little in the way of sympathy from Russia and China for its current economic woes. Both countries called for policy action to deal with external deficits.
“We see the temporary difficulties of some BRICS countries, mainly as difficulties in terms of international balance of payments,” stated Chinese Vice Finance Minister Zhu Guangyao.
The joint BRICS development bank, with a fund of US$50 billion, is also some time away from being fully operational due to disagreements over burden sharing and where it should be located.
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